The Mortgage Bankers Association (MBA) has unveiled a vision of a future housing-finance system that would turn Fannie Mae and Freddie Mac into private utilities and
secure most mortgage-backed bonds with an explicit federal guarantee. The newly
constituted Fannie and Freddie would function as shareholder-owned companies
that would continue to buy home and multifamily mortgages and securitize them,
but the government’s exposure would be limited to backing the bonds they issue.

Other chartered entities also would be allowed to enter the market as competitors.

Morningstar rates PACE loans high

Morningstar Credit Ratings said Property Assessed Clean Energy (PACE) loans present
little risk of driving a borrower into a foreclosure, and could bolster property values and save homeowners money through efficiency improvements. The securities
backed by the PACE revenue streams also are highly rated, Morningstar said. PACE is
a relatively new financing mechanism to fund energy improvements in homes. The
borrowed amount is added to the tax assessment on the property and appears on
the tax bill. PACE remains controversial, however. Banking groups, such as MBA, have
warned consumers to be wary of PACE loans.

Tax change could force GSE Treasury draw

Fannie Mae and Freddie Mac would likely need a significant one-time funding draw
from the federal government if Congress and the Trump administration succeed in
lowering corporate taxes, Fitch Ratings said. In the wake of such a tax change, the
government-sponsored enterprises (GSEs) would have to write down billions of dollars in deferred tax assets, resulting in a large one-time paper loss on the GSEs’ balance sheets. After 2018, the GSEs won’t have any reserves to offset such a liability, so
they would likely have to take a draw, Fitch said.

33 percent of all mortgage applications and represented 24 percent of the borrowers,
which is little changed since 2012. These numbers remain much lower than in 2000,
however, the last time the mortgage market had more “normal” credit conditions.

GSE loan volume surges in 2016

Interest in the most popular mortgage-loan types surged last year. The combined
volume of single-family home loans purchased by Fannie Mae and Freddie Mac totaled $909.2 billion, up nearly 24 percent from the 2015 mark of $733 billion, an analysis of annual reports shows. The GSEs’ combined loan counts for 2016 totaled 4.2

million, up more than 13 percent from the 3. 7 million loans originated in 2015. Of the
two GSEs, Fannie Mae saw the more significant gains over 2015. n